Merger review

Powers of competition authority

Does the competition authority have the same authority with respect to reviewing mergers involving IP rights as it does with respect to any other merger?

The economic competition commission has the authority to determine whether a merger should be authorised or not, regardless of the nature of the monopolistic or anticompetitive practices that are carried out in making such a merger. The FLEC also considers that a merger will be considered unlawful as long as it has the purpose or effect of hindering, diminishing, damaging or impeding free competition or economic competition.

Analysis of the competitive impact of a merger involving IP rights

Does the competition authority’s analysis of the competitive impact of a merger involving IP rights differ from a traditional analysis in which IP rights are not involved? If so, how?

The FCC makes no distinction between the study, investigation and, where appropriate, establishment of penalties with respect to the nature of the rights related to the merger of two or more companies. Although the element of intellectual property may be subject to a special study, it is not a differentiator with respect to the substantiation of the respective investigation.

Among other capacities, the FCC is responsible for authorising the mergers of companies before they are carried out when the following characteristics are present:

  • when the act giving rise to them contemplates an amount greater than the equivalent of 18 million times the general daily minimum wage in force for Mexico City;
  • when the act giving rise to them implies the accumulation of 35 per cent or more of the assets or shares of an economic agent whose annual sales originating in the country or its assets in that territory import more than 18 million times the general daily minimum wage in effect for Mexico City, or
  • when the act of origin implies an accumulation of assets or capital stock greater than the equivalent of 8.4 million times the general daily minimum wage in force for Mexico City and if the merger involves two or more economic agents whose annual sales in the country or assets in said territory import more than 48 million times the general daily minimum wage in effect for Mexico City.
Challenge of a merger

In what circumstances might the competition authority challenge a merger involving the transfer or concentration of IP rights? Does this differ from the circumstances in which the competition authority might challenge a merger in which IP rights were not a focus?

As already mentioned, the prohibition of a merger by the competition authority makes no distinction with regard to the nature of the unlawful nature of such a merger, whereby intellectual property rights do not make a difference in the motivation of the respective investigation.

It is important to mention that the competition authority can initiate an investigation for the purpose of prohibiting a merger that goes against free competition. The foregoing may be ex officio, at the request of the federal government or at the request of a third party through a complaint that complies with the requirements stated in the FLEC.

Remedies to address the competitive effects of mergers involving IP

What remedies are available to address competitive effects generated by a merger when those effects revolve around the transfer of IP rights?

The FLEC does not state specific sanctions with respect to mergers involving intellectual property rights, or rather, it does not contemplate such rights as a differential with respect to the sanctions to which the offender is subject.

Article 126 of the FLEC states the measures of urgency, ranging from a fine for the equivalent of 3,000 times the general minimum wage in force in Mexico city, up to arrest for up to 36 hours.

Likewise, article 127 of the FLEC states fines and sanctions, including ordering the correction or suppression of monopoly practices or illicit mergers, which may be sanctioned with a fine of the equivalent of 10 per cent of the income of the economic agent.